Affiliate marketing is big business on the Internet. It's basically a cooperative effort between a merchant (product owner) and an affiliate (website owner or online advertiser). For many years now, affiliate marketing has provided extra income for all kinds of Internet sites - and many affiliates have become downright rich from it. This is because affiliate marketing provides a win-win situation for both the merchant and the affiliate.

An affiliate is compensated for every visitor, subscriber, or customer provided through his or her efforts. It's basically getting paid by referring someone to a product. This is certainly one of the easier ways to make money online. The affiliate can earn a profit by having an advertisement or link to the merchant's website, which the prospective customer will hopefully click and proceed to make a purchase. As soon as the customer clicks on the advertisement on the affiliate's site, they get redirected to the merchant's website where they can buy whatever product or service that is being marketed. The more referrals, which usually equates to more website traffic, the more prospects will be sent to the merchant website, which means there are more chances to make a sale.

On the merchant's side, the merchant is compensated by the sale (or potential sale) of the product to the referred prospect. The affiliate relationship provides the merchant with a broader market in which to advertise a product or service. It gives the product or service much greater exposure than other traditional advertising techniques. The more affiliate sites a merchant has, the higher the traffic, which can convert to higher sales. You could say that affiliate marketing is the equivalent of having an army of salesman or saleswomen who will do the advertising and will only get a commission if there is a purchase.

Affiliate marketing is typically run by affiliate networks and these affiliate networks are composed of two functional groups, the group affiliates and the group merchants. Each has their own function and role when it comes to affiliate marketing. The affiliate network behaves as a third party between the merchant and the associated affiliates. The network provides the technology to deliver the merchants offers. The affiliate network also collects commission fees from the merchant and then pays the affiliates which are part of the program. Some popular examples of affiliate networks are clickbank.com and cj.com.

If you already own a website that is established and getting good traffic, you can certainly make some extra income by promoting affiliate products. However, owning a website certainly isn't a requirement to selling affiliate products. Many successful marketers have found great success in promoting affiliate products in eBooks, email and even pay-per-click (PPC) venues.